Why Should I Buy Or Use Bitcoins?

Nations are not ruined by one act of violence, but gradually and in an almost imperceptible manner by the depreciation of their circulating currency, through excessive quantity.

There are 3 key reasons for getting involved with Bitcoins:

1. Transferring money or value from one Bitcoin user to another (one of the smartest Bitcoins uses)

Here is a comparison chart of the a few methods of sending money and their costs:

Paypal:

As a gift, the transfer is free and limited in amount. Depending on whether an account is verified, the length of time the account has been opened and other variables, the limits can range from about $100 to $10,000 in one transaction. Fees will run approximately 2.5%. A $1000 transaction will net out to $975 transferred.

Western Union (WU):

Transfers range from $500 to $3000 for general transfers and up to $10,000 for foreign exchange transfers. Fees range from $5.00 to as high as $95 for cash pick-up in minutes. Medium range is about $50. The $1000 sent by WU will land as $950.00

Banks:

Wires will run roughly $30 outbound and $30 inbound. Sometimes that goes as high as $50 each way.

$1000 sent via bank wire will result in about $940.00 transferred.

There are several other digital online currency competitors including Pecunix, BullionVault, GoldMoney, and others. They are not generally used for buying things, but rather for electronic storage of wealth in precious metals.

Bitcoin:

Transfer $1000 in value through Dwolla.com or even directly through a person to person meeting, for almost no fee. The most a person might pay is approximately $0.25 when receiving over $10.

$1000 in BTC value (for today's date that would be about 9 BTC) would land in the recipients account as $999.75

2. Protecting our wealth by buying into Bitcoins.

This is not necessarily a profitable move. Bitcoins are highly unstable. Prices have risen over triple digits only to fall by 50% in less than 6 hours. (April 10-11, 2013)

Financial analysts use a term called “beta” for describing the range of an investment. Beta is also called volatility and relates to the risk of an investment. High beta investments include penny stocks, junk bonds, and some commodities. Low beta investments include treasury bonds, German bonds, etc. Bitcoins fall into the ultra-high beta category. Over time, the beta on Bitcoins will trend toward 1.15- 1.5 range. This estimate is based on continued acceptance and greater fungibility.

Variability happens across all markets, including currencies. Only when markets rise as fast as Bitcoin did, do they set-up for a steep fall just as fast.

Bitcoin was designed to offer a limited number of Bitcoins. Limiting Bitcoins through setting how many can be produced is supposed to create a currency that gains value over time.

Here is a chart showing the growth in $ value of BTC's:

This may be hard to see, but the values ranged from $.06 up to over $200.00. While this shows that huge profits are possible with trading Bitcoin, it also shows the possible downside. Storing wealth in Bitcoins at this stage of development is not, in my opinion, the best use of Bitcoin.

The chapter on “How to Trade Bitcoins” is probably a better way to work with Bitcoins. Increasing wealth by simply holding Bitcoins will work better later on. For now, Bitcoins are great for trading, not for storing wealth.

3. Joining the free currency movement and accessing all the motivated customers within it.

Over 600,000 people per month are searching online for how to join the Bitcoin movement. These are potential customers for anyone in commerce. Only a few stores accept Bitcoins currently (see the list in the Appendix). Any store that offers products for sale using Bitcoins taps into a growing market. It does not mean that a store has to only use Bitcoins. They can still accept credit cards, Paypal, or any other form of payment we choose.

Using Bitcoins for commerce and offering products to the growing marketplace brings excitement to the site, creates back links for improved online rankings, and helps grow the free currency movement.